Urban density, directed technological change, and carbon intensity: An empirical study based on Chinese cities

Abstract

Technological change is one of the most effective methods to reduce carbon intensity. Meanwhile, cities are essential carriers of technological change and carbon emissions. Considering the extensive land expansion in urbanization which always manifests in the density of urban economic activity, this paper analyzes the relationship between urban density and carbon intensity and also the mediating role of directed technological change to explore the interaction among them. First, the authors construct a theoretical model that considers the knowledge production sector, final goods production sector, and technical choice. Second, based on the panel data of 280 cities in China from 2008 to 2017, the authors use the two-way fixed effect regression, mediation-effect regression, and panel-threshold model to examine the results. The results show that: (1) The increase in urban density helps to reduce carbon intensity. (2) Capital-saving technological change is a mediating factor in the path of urban density's effect on carbon intensity. (3) With the increase in market size, the effect of urban density on capital-saving technological change weakens, thereby weakening the inhibitory effect on carbon intensity. Findings can provide a reference for reducing carbon intensity in other countries to formulate reasonable and practical policies for sustainable urbanization, especially for developing countries.